Generational Gap on Debt & Credit Scores

COSTA MESA – The latest credit trends study from Experian shows that baby boomers are strong and steady in their pursuit of the American dream, while the Gen Y’ers are starting to make their way by building credit with their student loan and auto loan payments. Generation X has the highest amount of debt in the study and second to lowest credit scores, while the Greatest Generation is reducing their overall debt and has the highest credit scores of all of the generations.

Findings from the study, released today, showcase the types of debts Americans have, the amounts they owe and the differences between the generations. The four groups studied included the Greatest Generation (ages 66-plus), baby boomers (ages 47 to 65), Generation X (ages 30 to 46) and Generation Y (ages 19 to 29).

The study shows that nationally, the average debt* in the United States is $78,030 and the average VantageScore® is 751. The debt and VantageScore distribution for each generation is listed below with Generation X carrying the most debt and Generation Y carrying the least:

Generation

Average debt

Average VantageScore

Greatest Generation

$38,043

829

Baby boomers

$101,951

782

Generation X

$111,121

718

Generation Y

$34,765

672

“While ‘generation gap’ is a common term when referring to topics such as music, fashion, culture and politics, the study reveals that age groups manage their money and debts quite differently as well,” said Michele Raneri, vice president of analytics, Experian. “The gap between the highest and lowest average credit scores is vast — 829 for the Greatest Generation to 672 for Generation Y — yet the amount of average debt for these two groups is very close. On the other hand, the baby boomers and Generation X are carrying much higher amounts of debt — about three times more — than the Greatest Generation and Generation Y.”

* Average debt for this study was calculated using first and second mortgage loans, auto loan/lease, other types of installment loans, as well as revolving accounts, but not necessarily a combination of all for each consumer.

Additionally, the results show the distribution of debt over six key areas, including first mortgage, second mortgage, bank and retail cards, auto loans and student loans. Each generation’s largest debt contributor is first mortgage with Generation X (76.3 percent) moving slightly above the national average by five percent. The Greatest Generation and Generation Y came in under the national average by 8 percent and 17 percent, respectively, and the baby boomers were in line with the national average. See the detailed chart below for percentage of debt segmented by age group and debt type:

First

Mortgage

Second
Mortgage

Bankcard

Retail
Card

Auto Loan

Student
Loan

Avg. Debt

Greatest
Generation

66.6%

13.4%

6.0%

0.7%

5.2%

0.7%

$38,043

Baby boomer

72.1%

10.2%

4.2%

0.5%

4.8%

1.4%

$101,951

Generation X

76.3%

5.9%

3.6%

0.5%

5.8%

3.3%

$111,121

Generation Y

59.9%

1.4%

5.2%

1.0%

13.7%

15.1%

$34,765

US Average

72.6%

8.3%

4.2%

0.5%

5.8%

2.9%

$78,030

Below are some additional insights from the study and the charts above:

The Greatest Generation has less than half debt of baby boomers and Generation X, but proportionally, their highest debt burden falls in the mortgage category at 66.6 percent, followed by their second mortgages at 13.4 percent, and bankcards at 6.0 percent. This generation tends to favor their bankcards with their debt in this category coming in at 43% more, proportionally, than the national average. The Greatest Generation also dominates 36 states with their high VantageScores and the highest score in the study — 855 — in Minnesota. Even the Greatest Generation’s lowest score — 783 — in Washington, D.C., is still higher than the national average.

Baby boomers tend to be equal to or under the national average in nearly every category with the exception of their second mortgages, which is proportionally 23 percent higher than the national average. When looking at the credit scores of baby boomers at the state level, they have their lowest score in Mississippi with a VantageScore of 736 and their highest score, 826, in North Dakota.

Generation X has the largest proportion of their debt falling into the mortgage category at 76.3 percent, and their second mortgages at 5.9 percent. They also tend to use credit for auto loans with 5.8 percent of their debt falling into that category. When comparing the highs and lows of Generation X’s VantageScores, their highest scorers are in Minnesota with a score of 759 and their lowest is in Mississippi with 667.

Generation Y shows some major shifts when it comes to where their largest debts are. Mortgages contribute to 59.9 percent of their debt, followed by student loans at 15.1 percent, auto loans at 13.7 percent and bankcards at 5.2 percent. While having the smallest amount of debt overall in the study, proportionally, their debts compared to the national averages are significant. This generation’s debt for mortgage is 17 percent lower, 421 percent higher for student loans, 136 percent higher for auto loans, and 24 percent higher in bankcards. Additionally, this generation has the lowest state credit score in the study — 634 — in Mississippi. Their highest score is 705 in Minnesota.

“For all consumers, establishing and maintaining a positive credit history is an important step in achieving financial goals,” said Maxine Sweet, vice president Consumer Education, Experian. “At any age, paying bills on time is the single most important contributor to good credit.”